The truth behind Illinois' jobless rate

Unemployment rate down, but Illinois still needs to fire up job creation

The unemployment rate in Illinois has dropped, and Gov. Pat Quinn is buoyant. "Our unemployment rate is as low as it's been in the last six years," he said after the latest numbers came out last week. "We're on the right track."

Not so fast, countered Republican challenger Bruce Rauner. He said the state unemployment rate is down to 6.8 percent because the number of Illinois residents working or looking for work has fallen: "Tens of thousands of people are giving up looking for work because of Pat Quinn's failed policies."

Who's right? Each candidate is seizing on a different part of the jobs picture. Each has a point — yet neither is immune to his opponent's political spin. The facts:

Illinois' unemployment rate has indeed plunged, as Quinn says. The drop from 9.2 percent in July 2013 marks the largest year-over-year decline since 1984. That is good news for Illinois residents.

And it's about time, too: The fall of Illinois' jobless rate has lagged those of its neighbors, as this page has pointed out repeatedly. Illinois finally is catching up with the other Great Lakes states after a couple of lost years on Quinn's watch.

Rauner is correct as well — to a point. In July, according to preliminary figures from the federal Bureau of Labor Statistics, the state's workforce declined by 17,100. The unemployment rate reflects the number of people who are seeking work but can't find it. So when Illinois residents drop out of the workforce, the unemployment rate falls: Those people no longer are counted as unemployed.

Why are so many workers leaving the state's labor force? Are Quinn's failed policies the reason, as Rauner says? The answer is complicated.

Across the country, economists say, "labor force participation," as it's called, has dropped sharply since the Great Recession of December 2007 to June 2009. About half of the decline nationally is due to the aging of the workforce. When workers enter their early 60s, they retire in droves.

As for the other half of the decline, no single factor explains it. The recession was severe. Millions of workers suffered long stretches of unemployment. Many got discouraged and gave up looking for work.

That said, bad government policy also has made a tough job market tougher. Exhibit A: jacking up personal and corporate income taxes, as the Illinois General Assembly and Quinn did in January 2011. Quinn now wants to make those temporary increases permanent.

Rauner is right that Illinois' labor participation rate has declined. It fell by 0.6 percentage points over the past year, and by 2.2 percentage points over the past five.

That rate declined in other Midwestern states as well: Over the past five years it declined by more percentage points in Ohio, Wisconsin and Missouri than it did in Illinois. It declined by fewer percentage points in Michigan, Indiana and Iowa.

Among its neighbors, then, Illinois is not the outlier in this particular measure that the GOP suggests. But Illinois has nothing to celebrate, either.

Perhaps most relevant to this summer's political debate, though, Illinois is failing to create jobs for its dwindling workforce at the rate that it must before citizens can think of their jobs recovery as robust. Over the past year, Illinois boosted its job total — we're talking about private-sector, nonfarm jobs — by a paltry 35,600, according to preliminary BLS figures. That was a tiny 0.6 percent increase in the overall number of jobs.

And, regrettably, that number is about the annual average for Illinois: Over the past five years, a net of just 156,900 jobs were created. Put another way: During five years when the number of U.S. jobs rose by 5.2 percent, the number of Illinois jobs rose by 2.8 percent. Big difference.

Many other states did better — some much better. Texas, which has not quite double the working population of Illinois, created more than 10 times as many jobs over the past year, and more than a million jobs over the past five years. Now that's a recovery.

Illinois needs to do everything it can to stimulate job creation, welcome employers and make the state a good place to do business. An improved unemployment rate notwithstanding, we're not even close to reaching those goals.

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